Montenegro has one of the fastest-growing economies in Europe. Foreign investment is aiding in the growth of Montenegro’s economy and it is currently considered the strongest growing economy in Europe. Montenegro’s economy, as it stands, is ranked number 46 out of 189 economies, according to the World Bank Group. This is not accidental or due to a lucky coincidence. The growth of Montenegro’s economy can be attributed to the government’s investment framework which has had a direct impact on exports, employment, foreign investment, and business activity.
Montenegro is in the process of tightening up in order to become part of the EU; which is reflected in the overall improvement of the business environment. The government of Montenegro has implemented favorable terms for company formation which include low tax rates, generous trade agreements with other European countries, low-cost company formation with high-speed setup time and 100% foreign ownership of a company.
In this article, we will take a closer look at the benefits of the relaxed laws governing foreign investors and the benefits of 100% foreign company ownership in Montenegro.
Foreign business owners in Montenegro benefit from being treated the same as the local business owners under the law. One of the beneficial aspects of company formation in Montenegro is that the government does not place extra expectations on a foreign business owner nor do they prohibit foreign investors from behaving like local entrepreneurs.
Foreign investors in Montenegro, as stated in Montenegro’s foreign investment law, refer to:
- A citizen of Montenegro who has a residence in a foreign country;
- A foreign legal entity or individual;
- A legal entity which has at least 10% share of foreign capital in the total entity’s capital or a legal entity that is established in Montenegro by a foreign person;
Montenegro, by law, states that a foreign investor may establish or purchase an enterprise and obtain interest and shares in a legal entity.
But why is the freedom of a foreign investor beneficial to a foreign business owner in Montenegro?
There are other jurisdictions which will allow a foreign business owner to start up a company under their laws and benefit from the advantages that the individual jurisdiction has to offer, however, foreign business owners may have to find a local person to enter into this process with him/her and the foreign entrepreneur is forced, by law, to hand over a percentage of his/her company to the local party.
Most of the time, the percentage split of company ownership does not sway to the advantage of the foreign business owner. Jurisdictions that require ownership to be split between a local and a foreign business owner will stipulate that the local business owner needs to own a majority of the company. Typically, one would be looking at a 49% ownership to 51% ownership split, in favor of the local business owner.
This means that you will not own a majority of the company that you have invested your hard-earned money in and worked hard to set up. It is also unlikely that you will be familiar with the local business owner which opens up another set of unknown risks.
The relaxed laws governing foreign business owners in Montenegro allows for protection and freedom. A foreign investor in Montenegro is allowed to own 100% of the company while Montenegro benefits from an expanding business sector.